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Business Plan Creation
 

Business Plan Creation

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    Business Plan Creation Business Plan Creation Document Transcript

    • (Company) Your First Step is to print this document (76 Pages). Use the printed document to edit and enter your information. Come back to this template and update with your information. October 2008 (month and year issued) Business Plan Copy Number ______ This document contains confidential and proprietary information belonging exclusively to (Company). (CEO's Name Here) Chief Executive Officer Address City, State Zip Code (xxx) xxx-xxxx © Copyright, 2009, JaxWorks, All Rights Reserved.
    • Table of Contents 1 Executive Summary 2 Present Situation 3 Objectives 4 Management 5 Product/Service Description 6 Market Analysis Customers Competition Focus Group Research Risk 7 Marketing Strategy Pricing & Profitability Selling Tactics Distribution Advertising & Promotion Public Relations Business Relationships 8 Manufacturing 9 Financial Projections 12-Month Budget 5-Year Income Statement Cash-Flow Projection Pro Forma Balance Sheet Break-Even Analysis Source & Use of Funds Summary Start-Up Requirements Use of Funding Proceeds 10 Conclusions and Summary 11 Appendix ► Be sure to number the pages of your plan. It is highly recommended that you use section numbering and number each page within each section vs. straight sequential numbering (i.e., 2-1 to 2-7). ► Topics can be listed as main sections or subsections (For example: Pricing & Profitability, Selling Tactics and Distribution are subsections under the main section Marketing Strategy). © Copyright, 2009, JaxWorks, All Rights Reserved.
    • (Company Name) Executive Summary ► This section is an abstract of your company's present status and future direction. ► It is usually written after all the other sections of your business plan are completed because it gives readers an overview of your business and it indicates how your business plan is organized. ► Edit the Executive Summary to about 2 pages. In 20XX, XXX (your group, company, product developers) was formed/created to XXX (produce and distribute XXX, take advantage of XXX, fill the void of ... -- describe the purpose of your activities). ► Company mission statement covering your line of products and services -- What kind of company do you want to be? Now, (Company) is at a point where XXX (what you need or want to do next -- take advantage of a specific opportunity or one in your marketplace; build your business to the next level, etc.). Background For many years people have XXX. ► How people managed to do without [your product/service]. ► How and where a similar product or service is now being used. The "state of the art"/condition of the industry today is such that XXX. ► Explain your place in the industry vis-à-vis competition or technology, etc. Our operation was producing $XXX (sales, units, products) by 20XX, and has operated at XXX (financial condition -- profitable, break-even, etc.) ever since. Revenue projected for fiscal year 20XX without external funding is expected to be $XXX. Annual growth is projected to be XXX% per year through 20XX. Concept ► Description of product or service. ► Desirability of your product or service. © Copyright, 2009, JaxWorks, All Rights Reserved.
    • We have just started/completed the design/development/testing/introduction of (product/service) -- a novel and proprietary XXX (example: soap for cleaning vinyl, retail store, construction tool, etc.). Compared to competitive products (or the closest product available today) our (product/service) can/will XXX. The ability to XXX is a capability unique to (Company)'s products/services. ► How would your customers compare your product with those of competitors? ► Advantages product or service has -- its improvements over existing products or services. Our strategy for meeting/dominating the competition is XXX (lower price, bigger/better -- your unique selling proposition). (Company)'s target market includes XXX (types of customers). (Company) is rapidly moving into its XXX (marketing phase). This approach is generating a tremendous amount of interest throughout our industry. In addition to our existing products/services we have developed/plan to introduce XXX follow-on products/services, (product) is a XXX and is especially useful to XXX (prospective customers) who can now easily XXX. Other products/services include XXX. All products from (Company) are protected by the trademark and copyright laws, and XXX (Patents, etc.). Responses from customers indicate that our XXX (product/ service) is enjoying an excellent reputation. Inquiries from prospective customers suggest that there is considerable demand for it. Relationships with leading OEMs (Original Equipment Mfgs.), retailers, Fortune 500/1,000 companies, major accounts, manufacturers and distributors substantiate the fitness of (Company) for considerable growth and accomplishment in our industry/area. Objectives ► Near term and long term. Our objective, at this time, is to propel the company into a prominent market position. We feel that within XXX years (Company) will be in a suitable condition for further expansion, an initial public offering or profitable acquisition. To accomplish this goal we have developed a comprehensive plan to intensify and accelerate our marketing and sales © Copyright, 2009, JaxWorks, All Rights Reserved.
    • activities, product development, services expansion, engineering, distribution and customer service. To implement our plans we require an investment of $XXX for the following purposes: ► Choose the activities pertinent to your goals: ► Build manufacturing facilities and ramp up production and inventory to meet customer demands. ► Maximize sales with an extensive campaign to promote our products/services. ► Add retail outlets, regional marketing/sales offices, print a direct-mail catalog. ► Reinforce Customer Support services to handle the increased demands created by the influx of new orders and deepened penetration into existing accounts. ► Augment company staff to support and sustain prolonged growth under the new marketing plan. ► Increase Research & Development to create additional follow-on products/services as well as to further fine-tune our competitive advantages. © Copyright, 2009, JaxWorks, All Rights Reserved.
    • Management Our management team consists of XXX (how many) men and women whose backgrounds consist of XXX years of marketing with XXX (Fortune 500 company names look great here), XXX years of corporate development with XXX (more Fortune 500 company names look great here too), XXX people with XXX years of engineering and design with XXX (company), a chief financial officer with XXX years of accounting, administrative, merger & acquisition, banking experience with XXX (company). ► Actually, any good company backgrounds pertinent to your management team's functions are good references to demonstrate a solid background and assure a higher probability of future success. Additionally, our outside Management advisors provide tremendous support for management decisions and creativity. In-House Management XXX President XXX VP Marketing & Sales XXX Controller XXX Operations Manager Outside Management Support (hourly/project basis) XXX Accountant/CPA XXX Attorney XXX XXX Consultant Marketing XXX (research firm, industry report, trade journal study) research projects a worldwide/nationwide market for XXX (product/service) to be approximately $XXX by the end of 20XX. Conservative estimates suggest (Company)'s market share, with our intensified and accelerated marketing plan, product/service development, manufacturing and customer service would be about XXX% -- generating $XXX by the end of 20XX. ► Describe the projections and trends for the industry or business field. The fundamental thrust of our marketing strategy consists of XXX (appealing to walk-in retail customers, reaching executives by direct mail, demonstrating XXX in manufacturing facilities). ► Describe briefly how you will make sales happen. We intend to reach XXX (a class/type of customer; market segment) by XXX © Copyright, 2009, JaxWorks, All Rights Reserved.
    • (placing a variety of classified ads, mailing a full-color catalog every 3 months, a full-scale telemarketing campaign -- marketing/sales/promo tactics). Overall, our company can be characterized as a XXX (high-profile retail merchant, aggressive distributor of XXX, quality manufacturer of XXX -- the business and image for your customers to see). ► Who are your customers? Where are they and how do you reach them? ► Are they buying your product/service from someone else? ► How will you educate customers to buy from you? A partial list of [actual] customers includes: XXX XXX XXX Also, XXX prospective clients presently evaluating XXX (product/service(s)) for use are XXX (actual customers). ► List customers under the Customers subsection of the Market Analysis section. Finance ► Briefly forecast financial expectations. ► See Income Statement, Budget, Cash flow, Balance Sheet (w/ratios), etc. attached. In XXX years we will have XXX (achieved goal) and our investors will be able to XXX (collect their return on investment). Conclusion (Company) enjoys an established track-record of excellent support/service for our customers. Their expressions of satisfaction and encouragement are numerous, and we intend to continue our advances in the XXX marketplace with more unique and instrumental XXX (products/services). © Copyright, 2009, JaxWorks, All Rights Reserved.
    • Present Situation ► Current condition of the organization -- a present-day "snapshot". ► Briefly take stock of your present situation regarding all of these areas -- just one page here should be sufficient. Market Environment The marketplace is undergoing rapid changes/has been stagnant for XXX years. We are poised now to XXX. Products and Services The present stage of XXX (product/service) is in the design, flexibility, early development, test, test market, mature stage. Product Life Cycle Our current product line/service is XXX (needs extending, reorganization, paring down). ► Time factors influencing your ability to make money with current products/services. Pricing and Profitability Current prices are XXX (holding, eroding, increasing) and profits are (holding, eroding, increasing). Customers Current customers are using our XXX for XXX (uses). They are requesting that we XXX (make improvements, introduce a new model). Distribution We have XXX service centers, retailers, manufacturer's representatives, sales people working out of XXX offices, territories in XXX states, countries. Management Most of our management is in place, however, we require a XXX (Finance, Production) manager to complete our team. Also, we are currently hiring XXX employees to XXX (jobs to fill). Financial Resources © Copyright, 2009, JaxWorks, All Rights Reserved.
    • ► Data from your financial statements should be plugged in below. Current cash available is $XXX. Our Current Ratio is: Assets/Liabilities = Our Quick Ratio is: (Cash & Equivalents + Accounts Receivable + Notes Receivable) / Total Current Liabilities = © Copyright, 2009, JaxWorks, All Rights Reserved.
    • Objectives ► Where you want to go. What you want to be. ► What do you want for yourselves (personally and financially) 5 years from now? The primary objectives of our organization are to: A B C ► What you will develop. What you will achieve. ► One dominant driving force: Product/service offered Satisfying a market need Manufacturing Profit & income Technology Client/customer base ► Illustrate that you have planned for investors to receive their return on investment -- go public in 5 years, be acquired in 4 years, etc. Business Goals Profits Products Customers Quality People Growth Management Fields of Interest Community ► This is an example of a list of business priorities. Compared to past performance of XXX (product/service name, type) in the XXX industry we intend to XXX. ► Match your performance expectations to industry realities and/or explain how and why your operation will be different. Rationale Based on our experience with XXX, we feel that XXX. ► Show how your company will fit you and your industry. ► Discuss objectives relative to common practices and procedures in © Copyright, 2009, JaxWorks, All Rights Reserved.
    • your industry. XXX of our managers come from environments where they experienced XXX (managing a large organization, a rapid growth high-tech development team) and XXX. ► Relate previous track record of managers to demonstrate feasibility of actually achieving your objectives given the experience of the people involved. Return on Investment Based on a XXX% market share for our XXX product/service by 20XX, we estimate our return on investment to be XXX%. ► How much and by when! ► Investors (and you too) want to know how they will generate a return of 35-60+%, and how much the company will be worth in XXX years. ► Use the following chart to summarize the basic dollar objectives. Financial Objectives Item Last Year This Year Next Year $000 % Sales $000 % Sales $000 % Sales Total Category Sales Sales $ Volume Unit Volume % Increase/Decrease Share of Market Gross Profit Manufacturing Fully Burdened Marketing Expenses Advertising Sales Promotion Trade Allowances Other Position for Growth 1. Understand customers, competition and industry. 2. Product/service/channel/customer congruency. 3. Product/service life cycles. 4. Growth by fields of interest. 5. Balance people/management/business goals. 6. Transition from single-point to distributed management. 7. Operate at 50 vs. 15 employees. 8. Develop values and culture. © Copyright, 2009, JaxWorks, All Rights Reserved.
    • 9. Hire the best people. ► This is a list of activities/priorities to consider for planning future growth. Other objectives we have set for ourselves include XXX. We expect to replace (competitive/existing products or services) by XXX% by 20XX. We plan to add XXX (retailers, distributors, service centers) per month/year and we will have a total of XXX (retailers, distributors) by 20XX. ► Make sure they fit the criteria set previously. Note: Objectives should be: Appropriate... They "ring true" for what you expect to be doing. Acceptable... Within industry and political environments. Feasible... Achievable given your resources. Flexible... Permit appropriate responses to contingencies. Measurable over time... Number of years. Motivating... Aggressive, yet achievable. Understandable... Makes sense to others not completely familiar with your concept. ► Now list the other objectives (e.g., awareness, distribution, competitive preemption, etc.). Make sure they fit the criteria set previously. ► Test your methodology in setting objectives. Make sure they are... Zero-based, not extrapolated from past trends or current budgets. Achievable given your resources. Consistent with the data in the strategic planning document. © Copyright, 2009, JaxWorks, All Rights Reserved.
    • Management ► "Generally, management of many is the same as management of few. It is a matter of organization." -- Sun Tzu - The Art of War. ► Prepare an organizational chart describing needed business functions and relationships. How We Started (Company) was founded in 20XX by XXX (founders) who XXX (describe background, purpose, and chain of events). The legal form of (Company) is Sole Proprietorship/General or Limited Partnership/Corporation/Subchapter S Corporation. ► Explain choice of form. Management Team Of the XXX people who make up the development staff, there are XXX founders who hold the following positions: XXX, President XXX, Vice President of Finance XXX, Vice President of Marketing XXX, Vice President of Sales XXX, Vice President of Engineering XXX, Vice President of Research XXX, Vice President of Operations XXX, Director of Marketing XXX, Manager XXX Development XXX, Corporate Attorney Each founder has been provided with XXX% of the original stock issue. The founders and key managers of (Company) have combined experiences exceeding XXX years in the XXX industry. The strength of the (Company) management team stems from the combined expertise in both management and technical areas. This has produced outstanding results over the past XXX years. ► Indicating a complementary cross section of areas of expertise is crucial to getting a favorable response from your potential investors. The leadership and alignment characteristics of (Company)'s management team have resulted in broad and flexible goal setting -- to meet the ever © Copyright, 2009, JaxWorks, All Rights Reserved.
    • changing demands of the quickly moving marketplace requiring our products. This is evident when the team responds to situations requiring new and innovative capabilities. Responsibilities ► These are the actual job descriptions for these people in these positions. ► Go to the library and see the Department of Labor's Dictionary of Occupational Titles for more descriptions and details. XXX, Vice President - Marketing Manage market planning, advertising, public relations, sales promotion, merchandising and facilitating staff services. Identify new markets and corporate scope and market research. Identify foreign markets. XXX, Vice President of Sales Manage field sales organization, territories and quotas. Manage sales office activities including customer/product support/ service. XXX, Vice President - Finance Manage working capital including receivables, inventory cash and marketable securities. Perform financial forecasting, including capital budget, cash budget, pro forma financial statements, external financing requirements, financial condition requirements. XXX, Vice President - Engineering Oversee product development including quality control, physical distribution, product and packaging design, new product development improvement, and improvements on existing products. Research and development. XXX, Vice President - Operations Perform service, manufacturing, raw materials management and allocation functions. Outside Support © Copyright, 2009, JaxWorks, All Rights Reserved.
    • An outside Board of Directors, including highly qualified business and industry professionals/experts, will assist our management team to make appropriate decisions and take the most effective action; however, they will not be responsible for management decisions. Board of Directors XXX, (Title/Function + contribution they will make) ► Use this page to highlight the backgrounds of your management team. ► Put each person's actual resume in the Appendix. Management Team XXX, President XXX Degree, University of XXX XXX's professional experience includes many different areas in the XXX industry. He/she has been involved in the XXX, and XXX's design experience covers many diverse areas. XXX required XXX's knowledge of XXX (example: electronics and mechanical design) to develop XXX (e.g., satellite tape recorders) that were used to XXX (e.g., gather information from outer space). At XXX (ABC Corp.), as a XXX (design engineer), XXX was involved in the development of XXX (something spectacular) -- for the first time. After learning the basic techniques of XXX (example: COBOL Programming), XXX worked with XXX (e.g., automated accounting systems). While working for XXX, XXX was involved with XXX. There he/she developed XXX. XXX enjoyed considerable success as XXX, however, he/she became interested in XXX (something else!). With ideas in mind, XXX conducted a feasibility study to determine the viability of a product capable of XXX. When he found that such a XXX was worthwhile and could be developed, XXX formed (Company). ► Provide a brief description of each person's background -- relating to their functions in the new organization. People/Talent We Require ► Discuss additional staffing requirements based on needed talents/services. (Company) development team recognizes that additional staff is required to © Copyright, 2009, JaxWorks, All Rights Reserved.
    • properly support marketing, sales, research, and support functions. Currently, (Company) is composed of XXX people; XXX will be required to meet the demands of the projected market over the next five years. Management Sales Customer Relations Manufacturing Skilled Labor Field Service Technicians Marketing Engineering Administration Assembly Repair Maintenance Government Regulations Because (Company) is operating in the XXX industry we are under the regulation of the XXX (government agency). ► List licenses and permits required. ► How will this agency regulate your business? ► How will you handle them? © Copyright, 2009, JaxWorks, All Rights Reserved.
    • Product/Service Description Proprietary information is available to investors upon signature of Non-disclosure Agreement. ► Discuss the characteristics of your products and services. ► How do they differ from similar products or services? ► What customer reactions may be anticipated due to these characteristics? ► Explain how you will satisfy customer needs and wants. XXX, our principal product/service, consists of XXX. ► How the product works or how the service is used. ► How have these products and services evolved over the past two years? (Company) currently offers XXX products/services. Development of other products/services is in progress and future products/services are planned. All products/services from (Company) have XXX (particular characteristics unique to your company). This capability for XXX is a unique feature enjoyed by (Company) and our customers. Current Products/Services A B C (product/service) The first product/service developed by (Company) is called XXX. Through advanced features including XXX. ► Describe any unique value-added characteristic your product/process provides to the customer and how this translates to competitive advantage for your company. Proprietary Technology Our product(s) is protected under the following: © Copyright, 2009, JaxWorks, All Rights Reserved.
    • ► Patents, copyrights, trademarks etc. ► Contact the U.S. Department of Commerce / Patent and Trademark Office, Washington, D.C. 20231 for more information. ► General Patent and Trademark Information: (703) 557-INFO. ► Status Information for a Particular Trademark: (703) 557-5249. ► General Copyright Information: (202) 479-0700. Pay Back For most customers, XXX will pay for itself in terms of XXX within XXX months. ► Fewer rejects or breakdowns. ► Lower warranty costs. ► Advantages leading to a better-quality end product. ► Faster turnover of inventory. ► Improved efficiency. ► Improved convenience. ► Advantages in opportunity costs saved in other areas. Regarding cost savings (product/service) will save our customers money in terms of XXX. ► Reduced labor costs, lowered reject rate, reduced downtime, lowered inventory costs, improved convenience and displaced employee activity. Our customers can generate more profits in terms of XXX. ► Heightened productivity, improved product performance, increased productive capacity and concentrating on their business. Some non-monetary benefits of owning/using (product/service) include XXX. ► Entertainment, improved appearance, better health, overload reduction, stress relief. Useful Purpose And Benefits (Product/service) provides XXX (features/benefits) that XXX (specific customer benefits). © Copyright, 2009, JaxWorks, All Rights Reserved.
    • These combined capabilities provide XXX (specific customer benefits) This, in turn, can be used to XXX (more specific customer benefits). In addition, XXX. ► Why customers will buy it from you. ► Proves that sales will be made. ► Proves that you can convince people to buy. ► Quantify where possible. Features Highlights (Product/service) is an extremely XXX, requiring XXX. For example: one of (Product/service)'s features is its ability to XXX. (Product/service) allows users to XXX. XXX is another powerful feature. This includes XXX. XXX saves a tremendous amount of time when XXX. Under conditions when XXX -- instead of XXX. One very strong capability is (Product/service)'s ability to XXX. Because of its extreme XXX (Product/service) can XXX. Compared to traditional XXX (Product/service), is approximately XXX. In addition, (Product/service) does not require XXX. Key Benefits of All Products/Services The major benefits of the combination of all products/services are improved XXX through XXX, and XXX. Tests Completed tests have shown that XXX (results). Additional tests planned/required will enable us to XXX. ► Describe test objectives. Economies of Scale © Copyright, 2009, JaxWorks, All Rights Reserved.
    • ► Discuss how you plan to take advantage of production efficiencies when unit quantities are ramped up. ► See also Manufacturing section for more details. ► For service organization -- lower management to labor ratio. Product/Service Life Cycle ► The time factors influencing your ability to make money, and the effects of economic cycles. Include contingencies. ► Explain life cycle of product/service. For greatly increased understanding, it is recommended that you create a simple chart covering the life cycles of your products/services. ► Where are your products on this chart? If several products are in different life cycle positions, indicate each separately. ► What conclusions do you draw from the life cycle positions? Planned Products/Services (Company) plans to continually develop new products and enhance existing products. New products/services that are to be developed in the near future include a XXX, XXX and a XXX. Concepts for follow-on (next generation) products or services include XXX. ► Discuss plans for your next generation of products/services. ► Discuss add-on services for future customer needs. Exhibits ► Drawings of the product to be manufactured or a detailed description of the service to be offered. ► Tests made, the data and results. © Copyright, 2009, JaxWorks, All Rights Reserved.
    • Customers ► Who is buying products or services in this category? By Demographics: age, income, sex, family, location, occupation By Psychographics: lifestyle, motives, needs, interests (sports, etc.), purchase history (recent buyers of XXX) ► Use information from industry reports, census data, trade journal studies, etc. ► Include Titles of people who: INITIATE the inquiry for your product/service, INFLUENCE the decision(s) to buy (and how they influence it), DECIDE which product or service to buy, PERMIT the purchase to be made (sometimes the decision maker and the permitter are the same person, but oftentimes, for example, the CFO will sign the paperwork after another manager has submitted his/her recommendation). ► Knowing exactly who you're selling to is crucial to obtaining favorable response from your investors -- they know that all the sales talent in the world is wasted unless it's directed to the proper person. The most typical customer for our product/service is someone who is in the XXX field, and who currently uses XXX (product/service) for XXX (application, purpose). It is likely that potential customers are going to be familiar with XXX (similar products/services, products that your new one will replace, your type of product) and that they will readily accept our new XXX provided that we XXX (approach/educate/contact). Complementary products/services already in use by our customers are XXX (other products/services that work with yours) and are seen as a tremendous help in XXX (compelling customers to acquire our product/use our service). It is easy to understand why the principal buying motives are XXX because XXX. ► What are the principal buying motives for your products/services (practical & emotional)? ► Ask your customers -- telemarketing, warranty cards, ad inquiries, etc.! ► How are the key competitors perceived? ► How do these people perceive your company and products/services? © Copyright, 2009, JaxWorks, All Rights Reserved.
    • And / or how WILL they receive your (new) product/service? ► How sensitive are they to pricing differences? Corporate Executive Title: President, VP Finance, VP Manufacturing, Office Manager, Advertising Manager Power: Permitter, Decision Maker, Influencer, Technical Consultant, Initiator Viewpoint: Big Picture, Financial, Department, Personal Position: (Responsibilities -- daily activities) Emotional Influences: Status, Power, Empire building Practical Influences: Saving money, efficiency Education: Ph.D. MBA, College, Technical School, High School Limitations: Geographical, Purchasing Approval Housewife Age: 35-55 Income: Fixed Sex: Female Family: Full nest Geographic: Suburban Occupation: White collar / Blue collar family Attitude: Early majority Young Professionals Age: 25-35 Income: Medium to high Sex: Male or Female Family: Bachelor or married Geographic: Suburban Occupation: White collar Attitude: Innovator Young Married Couples Age: 35-55 Income: Medium to high Sex: Male or Female Family: Married or no children Geographic: Suburban Occupation: White collar Attitude: Early adapters Wealthy Rural Families Age: 35-55 Income: High Sex: Male or Female Family: Full nest Geographic: Rural Occupation: White collar © Copyright, 2009, JaxWorks, All Rights Reserved.
    • Attitude: Early majority Older Couple Age: 55-70 Income: High or fixed Sex: Male or Female Family: Empty nest Geographic: Suburban Occupation: White collar or none Attitude: Late majority Elderly Age: 70+ Income: Fixed Sex: Male or Female Family: Empty nest Geographic: Suburban Occupation: None Attitude: Late majority Case Study ► Where possible, succinctly document Customer Case Histories of their selection, application and success with your company and product(s). ► PURPOSE: Investors and new customers will feel reassured about doing business with you. ► Customer Case Histories are excellent sales tools for your sales force. Don't neglect this simple and powerful asset. Customer List ► On a separate page, list your customers alphabetically. ► If appropriate, state their application of your product/service. © Copyright, 2009, JaxWorks, All Rights Reserved.
    • Competition ► Look in your telephone book's yellow pages. ► Look in the industrial directories at your local library. ► Read industry magazines and look for advertisers. (Company)'s product/service(s) offer XXX in XXX situations. Competitive threats today come from XXX (other companies, industries, new/entrenched technologies, foreign countries), and XXX. (Company)'s products/services perform in virtually all situations where XXX (your features, benefits, your customers are likely to be). The ability to XXX (what it can do) with full capability on XXX (list of applications, machinery, people) is unique to (Company)'s products/services. The ability to XXX (what it can do) is unique to this product/service, and our research indicates that its performance is superior to anything else on the market today. In all comparisons, (Company)'s products/services provide more features and have superior performance than competitive products/services. In most cases, the number of differences is substantial. A complete technical comparison is available. ► Put all comparisons and test results in the Appendix of this business plan. XXX Product/Service Companies that compete in this market are XXX, XXX, and XXX. All companies mentioned charge competitive prices (list examples). XXX's (competitive) product/service does not provide the same capabilities in a situation where XXX (describe circumstances). This is the only way XXX (your product/service) and XXX (their product/service) compete. XXX (competition) advertises in XXX, XXX, and XXX publications. ► Discuss results -- if they advertise consistently/continuously there, it must be working for them. Companies with competitive products/services in this market are XXX. © Copyright, 2009, JaxWorks, All Rights Reserved.
    • XXX (competitor) products only operate in a XXX (limited, etc.) way. This market segment is not shared with any competitors. Competition does exist, however, in the XXX (industries, countries). Competitors in this area are XXX, XXX, and XXX. ► False or incomplete information here translates as dishonesty and negligence to investors, bankers, etc. ► Do not delude yourself (or your investors) regarding competition. Competitive Roundup The following chart illustrates how (Company)'s product/service compares to the competition in several different key areas. Competitive Roundup -- Company Product/service XXX XXX XXX Company XXX XXX XXX Estimated 19XX Sales (000) $ Estimated Share of Market % Estimated Advertising Budget $XX Rank: 1=Weak to 5=Strong: Product Line XXX XXX XXX Quality Technology Advertising Effectiveness Sales Force Excellence Distribution Manufacturing Efficiency Standing in Industry Future Potential Seriousness of Competition Number of Employees Greatest Strength Key Weakness How we should react to them Competitive Roundup -- Product/Service Price XXX XXX XXX Size Capacity Ease of Use Installation Range Appearance Quality Design © Copyright, 2009, JaxWorks, All Rights Reserved.
    • Useful Life Trade-in Value Technology Responsiveness State-of-the-Art 24 Hour Availability/Support Technical Expertise Repair Service Efficiency Guarantee/Warranty Complete On-Time Capability Upgrades Observations & Conclusions It appears, from the above information, that XXX. ► Are there market niche opportunities we have overlooked? ► Are our resources being deployed against the most serious competitors? ► Place competitors' advertisements and brochures in the Appendix. © Copyright, 2009, JaxWorks, All Rights Reserved.
    • Focus Group Research ► This is optional for a business plan; however, if you have this information already, certainly include it with your plan! ► It is best to commission a qualified and experienced market research firm for this project, however, you can prepare thoroughly and conduct an effective Focus Group study yourself. ► Typically, a group of 8 to 15 people (from your target industry -- engineers, buyers, customers) are gathered in a room with a moderator. ► You'll have to compensate them in some way -- it probably would take a half day of their time. ► The room should have a one-way mirror allowing for a video taping crew to record the entire event. ► The moderator will work with a list of questions prepared from the points highlighted below. Purpose The Focus Group Research Program will be conducted to discuss key concerns and interests of XXX (department/industry) and managers in the area of (department/industry/profession). The data that is derived will help (Company) refine its products/services and sales support systems to better serve the XXX industry. The results of the group sessions also will assist (Company) in focusing issues for long range marketing, advertising and promotion plans. It may appear that some of the information requested from this Focus Group Study can be supplied by our sales force. However, the salesperson's information is not empirical to our customers' perspective. There are a number of customer profiles that need to be investigated, and we will research and deliver a fully-rounded profile of the buyer and his peer group in order to execute marketing based on sound, objective data. Discussion Points ► Listing of key dynamic OEM's, dealers by group members (unaided -- let them tell you without being prompted). ► Listing of key areas of concern by the group members (broad discussion points should include supplier reputation, technology, leadership, sales support, and technical support) in selecting a supplier. © Copyright, 2009, JaxWorks, All Rights Reserved.
    • ► Merge lists (graphically on chart) having attendees rate/rank each manufacturer by the various attributes they've noted in step above. ► Probe attitudes as we go, focusing on (Company) and top competitors. ► Given key concerns as noted, what are the trade-offs? Why do they tend to select one manufacturer over another? ► Have attendees define influences in the purchasing loop, their role and their relative influence and weight. Also discuss the sales cycle -- steps, timing, how long it is likely to take before an order is placed. ► Where do the attendees (and others in the purchasing loop) get their information? How does flow of information take place (trade shows, advertising, technical articles)? ► What type of information do they find most useful (catalogs, spec sheets, advertising, etc.)? (They will be shown samples from (Company) and others.) ► Specifically, what type of information do they want/need from an advertisement? How do they like it presented? In terms of the key concerns noted earlier, which should be presented in the advertising? ► What type of follow-up do they prefer? Reader service numbers? WATS (800) line? Coupon? What type of information is worth their spending any time at all requesting? ► Looking at each manufacturer, what should each one be doing to improve their overall service to the engineer and their needs -- and what specifically, fulfills their needs? © Copyright, 2009, JaxWorks, All Rights Reserved.
    • Risk ► This table shows an example of how risk may be evaluated, where it stems from, and which areas are most dangerous. It allows you to compare your exposure, given various assumptions. The "weights" shown in the table below are arbitrary samples. You should adjust the weights to reflect how elements of risk affect your your business. The Overall Risk should always total 1.0. ► The example shows a relatively new company in a growing, yet new industry with an excellent management team, although they haven't enjoyed a lot of success [in this industry?] The most important variables, however, are the industry and position within that industry. The assumptions play the next important role -- this is saying that a lot is riding on their assumptions. Elements Degree of Risk of Risk -------------------------------------------------------------------------- Low Medium High Weight Total -------------------------------------------------------------------------- Industry 5 .25 1.25 Maturity 5 .05 0.25 Competitive Position 1 .25 0.25 Strategy 1 .05 0.05 Assumptions 10 .20 2.00 Management 1 .10 0.10 Past Performance 5 .10 0.50 Overall Risk 1.00 4.40 Rationale ► Fill in appropriate information. Industry: Company must stay competitive as business matures. Maturity: In the mature stages there are likely to be competing models/companies. © Copyright, 2009, JaxWorks, All Rights Reserved.
    • Competitive Position: The market is wide open. Few competitors. Strategy: Product/service, price distribution, promotion strategies are straight forward. Assumptions: Sales forecasts for new products/services are difficult to predict. Product/service acceptance is good -- sales estimates are considered conservative. Management: Careful planning and clear objectives should not present much risk. Past Performance: NA © Copyright, 2009, JaxWorks, All Rights Reserved.
    • Market Analysis ► This section describes the existing marketplace in which you will introduce your company and products /services. Market Definition Key points in defining the market segment for (product/service) are XXX, XXX, and XXX. ► By product feature, by lifestyle of target consumers, by geographical location, by season, etc. ► Include charts where appropriate. Currently, the market distribution is shared by XXX participants. ► How is share of market distributed among major participants? ► What are the share gain and loss trends? ► Summarize your view of the trends and implied opportunities. XXX (product or service type) Market Users of XXX (product/service) are looking for quality and productivity improvements. XXX (past/current/recent/lack of) development of XXX (product/service) has resulted in the need to XXX (changes, corrections, applications of new technologies). This innovation is called "XXX", and allows XXX (product) to operate efficiently (or more efficiently) as XXX. The (product/service)'s ability to operate/perform/provide XXX (benefits) is unique to (Company)'s products. Independent market research indicates that there is currently only XXX (quantity) (product/service) for every XXX customers. The XXX (market/industry), as a whole, is looking toward XXX (manufacturers/suppliers/retailers/experts) for use in the expansion of existing applications/product lines/services. ► For an existing Business (your own or a recent acquisition) review: Sales history Profits Market Share & Position Marketing methods Industry Trends © Copyright, 2009, JaxWorks, All Rights Reserved.
    • The stability of this market segment is XXX (volatile, uncertain, etc.), based on XXX product category performance over the past two years. ► What do industry forecasters predict for the next two? The XXX market is growing at a rapid rate. The market for XXX (similar products/services) amounted to $XXX million* in 20XX -- representing a XXX% growth over $XXX million* in 20XX. Referenced sources agree that the major trend is for XXX. The trend has been toward the development of XXX (other products/services) and, hence, the latest development of distributed or shared resources. The overall XXX market for the XXX industry is projected to be $XXX billion* by the end of 20XX. The overall market potential for (product/service category) is estimated to be $XXX billion by 20XX, and the (additional products/services) portion of this market is estimated to be XXX million.* The area of greatest growth in the XXX market is in the area of "XXX". * Source: XXX (industry analysts, census, trade journal studies) Possible Retail and Wholesale Outlets Include: Store type Total SIC Code Department Stores 23,275 5311 Garden Supply Stores 16,496 5261B Hardware Stores 40,140 5251 Giftware Wholesalers 3,524 5199G Electrical Equipment Whlse 41,313 5063 Total 124,748 ► Collect mailing list catalogs -- look for all the possible outlets for your product/service. ► Look in your telephone book classified advertising under Mailing Lists. ► Complete the chart above -- the list may surprise you as well as prove to be a valuable resource for resellers. The major market segments are: XXX XXX ► List, by broad category, the types of customers you are likely to sell to. ► Retailers, Electrical Contractors, Mail-order Catalogs, etc. © Copyright, 2009, JaxWorks, All Rights Reserved.
    • XXX (Specific Market Area) Segment This segment of the market is generally based on XXX (products/services) and XXX (products/services) with retail prices in the range of $XXX to $XXX. The vast majority of sales in this category will be handled by OEM's, Retailers, Manufacturer's Representatives. The minority of sales will be through direct channels. Over the past XXX years, XXX (similar product manufacturers/service providers) companies have proven that meaningful features can be developed for this class of XXX (product/service) (e.g., XXX, XXX, and XXX). These companies have primarily focused on the use XXX (manufacturing technique, special materials, recipes, chemicals, machinery) to improve the quality of XXX in a (product/service). These products have been successfully distributed in many areas of the industry. Competitive products/services in this market are produced/provided by XXX, XXX, and XXX. In the next XXX to XXX years it is estimated that there will be more than XXX million of XXX (product/service)s distributed.* * Source of Statistics: XXX (industry analysts, census, trade journal studies) Of the XXX customers, approximately XXX% will buy/use/want/expect XXX to help them to XXX (deliver their work, maintain their XXX, expedite their production, reduce costs). XXX of these (products/services) (actually about XXX) will have a XXX capability, and about XXX of those (products/services) will require XXX (other features). The market potential for a (product/service) in these quantities -- with a current retail price of $XXX per unit -- is approximately $XXX million. ► Repeat the above information for as many market segments as are required. Strengths ► In covering your strengths, be sure to place at least as much emphasis on marketing as on your product, if not more. In terms of product/service strength, XXX (product/service) has several distinct advantages over the competition. First is its marked advancement in XXX technology. ► How else is the product/service favorably differentiated from the competition? ► In actual performance? © Copyright, 2009, JaxWorks, All Rights Reserved.
    • ► In quality and reliability? ► In production efficiencies? ► In breadth of line and/or options? In marketing, our most powerful assets are XXX. ► In category/share leadership? ► In segmentation? ► In distribution? ► In pricing? ► In awareness/image? In the corporate arena, (Company) is supported by XXX. ► What are the corporate strengths? Size Financial resources People resources Reputation Business Relationships (expand on this in the Business Relationships section) Weaknesses There is/are XXX handicaps inherent in our product. The only notable marketplace disadvantages are XXX and those are because XXX (explanation). By 20XX we should be able to position ourselves in order to XXX and thereby reduce this weakness considerably. Corporate weaknesses, at this time, consist only of XXX, however we are taking steps to XXX which we feel should alleviate this problem. Environmental threats (declining markets, trade barriers, consumer trends, changing economy) include XXX. Other known threats include XXX. Opportunities The upside potential for XXX and XXX (our products/services) in XXX (each of the currently addressed markets) over the next two years is XXX. © Copyright, 2009, JaxWorks, All Rights Reserved.
    • Based on XXX (existing conditions), introduced in the Present Situation and Strengths/Weaknesses analysis it is apparent that (justify potential with logical rationale). Unexploited Opportunities An altogether new application for this product/service would be tapping XXX markets. Further opportunity for our product exists in XXX market(s). ► Can the current line of products/services and technological capabilities be leveraged effectively? ► What is the estimated cost of entry, time frame, and risk? Still another possibility for development involves XXX. ► Alternative distribution, technology licensing, creating up/down market brands, etc. © Copyright, 2009, JaxWorks, All Rights Reserved.
    • Pricing and Profitability ► How do we set prices? Is there a policy? ► Is the pricing competitive? ► Is there perceived value (it costs more therefore it must be better) inherent in higher prices? ► Are prices based on costs -- standard markup? ► Why are they higher or lower than competitors? ► How elastic (the effect of pricing on demand for product) is the market for these products? How does consumer positioning affect elasticity? ► See also Break Even Analysis in the Financial Projections section. The prices for our products /services are determined first and foremost by XXX (competition, costs, suppliers, manufacturers, package deals). It is important to know that XXX (sliding scales, volume, regulated, competitive, perceived value ), pricing is inherent to our market profile. Compared to the competition, our prices are XXX. ► List examples of competitive pricing. ► Put copies of price comparisons and reports in the Appendix. Different seasonal aspects of our market affect our pricing because XXX (what happens as your selling seasons change). We feel that our customers will pay $XXX because XXX (purchasing rationale, see also "Pay Back" in Product/Service Description section.) Margin Structure Retail ► Ask friends/customers in retail management regarding quantities they are likely to buy and discounts that would entice them to order more. Distributor ► Ask regarding quantities their customers are likely to order, Gross Profit Margins/percentages they work with. Manufacturer's Representative ► What percentage commissions to they make? Usually between 5 and 20%. © Copyright, 2009, JaxWorks, All Rights Reserved.
    • Direct Sales ► Determine cost of each sale -- time and expense involved, package deals. Discounts We can take advantage of volume purchases by XXX. ► Place scheduled orders (100 units per month = 1,200 units ordered over a year -- just place the order up front). ► Are there discounts for paying cash or within XXX days? Cooperative advertising -- manufacturer pays 2-10% of purchases toward your advertising of their product. We plan to review our pricing and product/service margin every XXX (months). ► Should a new pricing policy be investigated? Are potential profits being left on the table? Costs Estimated cost of manufacturing product XXX. ► Rationale/explanation. ► See Financial Projections section for details -- work with the Break-Even Analysis worksheet to evaluate the effects of variable costs, sales volumes and pricing levels. © Copyright, 2009, JaxWorks, All Rights Reserved.
    • Selling Tactics Current Selling Methods ► Activities to be used in selling your product or service. ► Methods to promote product or service: direct calling, telephone, advertising, mail, radio, television, or other. ► Sample brochure, advertisements, announcements, or other promotional literature should be placed in the Appendix. ► Margins of safety allowed in sales forecasts. ► Recommended reading: How to Master the Art of Selling by Tom Hopkins. Sales ► It is important to demonstrate that the price and profitability of your product justifies the costs of sales (presentations, commissions, telephone, travel) and your distribution channels(s) are selected accordingly. (Company)'s marketing strategy incorporates plans to sell our line of products/services through several channels: Executive Selling Direct Sales Force Manufacturers' Representatives Distributors Retailers National Chains Regional Chains Independents Mail-Order/Direct Response Catalogs Telemarketing Joint Marketing Relationships OEM's (Original Equipment Manufacturers) International Distribution ► See also Distribution for detailed description. ► See also Business Relationships section for existing arrangements. ► See also Advertising & Promotion section "Direct Mail" for specifics. © Copyright, 2009, JaxWorks, All Rights Reserved.
    • Feedback Loops ► Lead generation. ► Lead referral and follow-up systems. ► Information gathering and dissemination. Executive Sales ► This type of selling is usually most appropriate for very expensive products or services (executive jets, yachts, and large estates come to mind) where it is important to deal principal to principal when negotiating the sale. Because our customers tend to be top corporate managers, it is important that our company president and senior managers present our product/service to our customers. Direct Sales The majority of sales will be through direct sales by the (Company) sales staff. (Company) anticipates hiring XXX additional sales representatives to (cover additional territories, retailers, distributors, markets, sell specific products /services). ► See Organization Chart, page XXX. We have chosen to use a direct sales force because our products/ services require considerable customer education and post sales support -- directly from the company. Our price point, pricing structure and profits are such that our costs of sales warrants a sale to be handled on an individual basis in this manner. Manufacturers' Representatives Because manufacturers' representatives carry several product lines compatible with ours, we feel that it would be appropriate to select manufacturers' representatives carrying XXX, XXX, and XXX (complementary & compatible products -- automotive products to parts stores, marine supplies to boat dealerships, etc.). Also, manufacturers selling XXX (dissimilar products yet appropriate to their customers' customer -- publishers selling computer software to bookstores, etc.). ► See also Advertising & Promotion section "Direct Mail" regarding locating appropriate representatives for your firm. ► Contact customers and retailers and ask them who they would recommend to represent your product (firms and people they respect and © Copyright, 2009, JaxWorks, All Rights Reserved.
    • do business with). Distributors One of the key elements designed into the (Company) marketing plan is the targeting of our distributors. It is important to select distribution channels already in existence and staffed with professionals possessing appropriate backgrounds and clientele. (Company) products are pertinent to the nature of the distributor's business and to the well-being of their customer base. Also, it is significantly less difficult for us to reach distributors and educate them as to the benefits available in using XXX (product). This strategic marketing approach takes full advantage of the tremendous momentum inherent in the fact that these professionals are already involved with parallel products and services. They already have expertise and have been practicing in their field for a length of time. By operating within these distribution channels in this manner we feel that we can maintain control of our market. In addition, we can generate growth at a reasonable pace and obtain excellent sales results. ► Be sure to consider the additional reduction in sales revenue to allow distributors their profit margin -- they must mark up your prices 15 - 30% to their retailers. ► See Distribution for detailed plan of action. ► See also Advertising & Promotion section "Direct Mail" regarding appropriate distributors for your firm. OEM'S With Original Equipment Manufacturers we can incorporate our XXX (product) into their product line by XXX (explain how your product can be included within theirs -- they sell your outboards with their boats, your windshield wipers with their cars). For manufacturers of XXX (their biggest system/product) we can sell XXX (product) as part of their XXX. It is also possible to provide a private-label line as an additional product for XXX distributors. Retailers ► What Dealers Want From Manufacturers: Price Point - Attractive and Reasonable Profit Margin - Worthy of Sales Emphasis Technical Support - Accurate and Immediate Response Quality - Design, Construction and Packaging Advertising and Public Relations - Customer Awareness and Demand © Copyright, 2009, JaxWorks, All Rights Reserved.
    • Effective Sales Materials - Ease and Expedite Sales Process Competitive Advantages - Features and Benefits Stocking and Delivery - Available When Needed No Mass Merchandisers - Maintain Profit Margins & Market Position Telemarketing ► Look in your telephone directory under Direct Mail for mailing houses. Some also handle inquiries, and others provide an 800#. Outside sales support * Literature mailing * Follow-up calls * Order entry Inquiry Response * Order entry * Literature mailing * 800# Order/Support Hotline * Marketing research New Business Development * Contact distributors, retailers, customers * Schedule appointments ► Write a comprehensive telephone script that everyone can use when responding to inquiries. ► Carefully address each issue (questions, objections, etc.). ► Write out your responses AS YOU WOULD SAY THEM. ► Practice with a tape recorder OR call your answering machine and see if you would buy it -- keep adjusting it until you would! © Copyright, 2009, JaxWorks, All Rights Reserved.
    • Distribution (Company) will use several different distribution channels. The determining factors in choosing these channels are XXX. ► Customer profile. ► Geography. ► Seasonal concerns. ► Efficient use of funds. ► Feasibility of using channels of similar products already on the market. Key competition uses the same channels by XXX. ► Distribution opportunities. ► If available, include a chart of CDI/BDI (Category Development Indices/Brand Development Index) performance. ► What is our ACV (All Commodity Volume) distribution? The competition's? Method The primary means of distribution will be XXX. ► How your products are (can be) distributed. ► Make a chart to show how they get to the ultimate consumer. Additional channels planned are XXX. An important advantage to these alternate channels is flexibility. By using more than one method, (Company) will have more control and also more options with which to respond to special needs and circumstances. Other features of our secondary channels are low cost, quick start-up, increased capacity. Coverage Regional target areas are XXX (where you will begin sales). Reports indicate the highest level of consumer interest in these areas. © Copyright, 2009, JaxWorks, All Rights Reserved.
    • Because our distribution network is XXX (already set up or in use, easy to implement, cost-efficient, etc.) we can enjoy national/international delivery immediately. This, in turn, will reduce shipping time and increase customer satisfaction. To date, XXX (many of, xxx of, none of) our competitors are able to achieve this. Roll-Out Program We have selected from XXX key market areas. ► Areas based on proximity -- easy to sell into, contact, deliver to, have customers come to. Manufacturers' Representatives we have chosen are: Name Territory Type ABC Sales Western U.S.A. Marine Supplies Distributors we have chosen are: Name Customer Base Type DEF Distribution 4,500 Sailboat Dealers Retailers we have chosen are: Name Number of Outlets Type GHI Stores 31, So. California Sailboat Dealer There are XXX number of dealers in each region. ► See Advertising & Promotion section under "Direct Mail" for ideas on locating dealers, wholesalers. ► List regions in order of Roll-out sequence. ► List key distributors/retailers/etc. in each as top priority. International ► List countries by order of priority. ► List distributors/representatives/retailers/etc. in each. Trade Incentives ► Allowances, Co-op Accruals, Warehouse Flushing Promotions, etc. © Copyright, 2009, JaxWorks, All Rights Reserved.
    • Customer Service XXX (customers) managers emphasize that support is one of their major concerns. They are constantly impressed with the support provided by (Company). Hot-line service is currently available to all customers enrolled in a maintenance/support program. We intend to provide free pickup and delivery for customers in the XXX areas by using (our own trucks / couriers). The purpose for this service is to assure customer satisfaction and loyalty, and in addition, allow us to increase sales as well as maintain a high profile within our service area. Another service to add value is to provide warehousing of customer inventory. This allows us to book larger orders and provide faster order response. Support to manufacturers representatives is provided as required. This allows them to perform efficiently as a sales force. We intend to treat the manufacturers' representatives as an extension of the (Company) direct sales force, and they will be given the same support as the (Company) internal sales staff. Technical backup support to OEMs' support groups is currently supplemented by (Company). The OEMs' staffs respond to the needs of their customers, and when they encounter a support issue that requires more information, they may direct their customer to (Company) or they may contact (Company) to obtain the necessary information. Technical support to marketing and sales functions will be strengthened. Pre- and post-sales situations involving the application, presentation, and demonstration of XXX products will be supported by XXX (staff). Returns & Adjustments Policy At this time, general trade customs for handling returns are XXX (describe how returns are generally handled). "If for some reason XXX(tm) is not right for your business you may return it for a full refund within 30 days of receipt of product. You must call (XXX) XXX-XXXX for a Return Authorization number (RA#). Refunds are made only on the price of the package + applicable taxes and do NOT include shipping costs. Credit card refunds are credited to your account and cash/check payments are refunded within 30 days of receipt of returned merchandise in good condition with RA#. We intend to (follow/depart from) industry custom by implementing a returns and adjustments policy whereby XXX (explain your plan and how it will work) © Copyright, 2009, JaxWorks, All Rights Reserved.
    • Our reasons for (following/departing from) customary procedures is XXX (give reasons -- advantages, benefits for you and your customers). © Copyright, 2009, JaxWorks, All Rights Reserved.
    • ADVERTISING & PROMOTION Tools and methods to increase our customers' awareness of our product(s). ► Your purpose: enhance, promote, and support the fact that your products / services XXX. ► Remember: Advertising and promotion is an investment, not a cost. ► Recommended Reading: Ogilvy On Advertising by David Ogilvy. (Company) recognizes that the key to success at this time requires extensive promotion. This must be done aggressively and on a wide scale. To accomplish our sales goals, we require an extremely capable advertising agency and public relations firm. (Company) plans to advertise in major trade magazines such as "XXX", "XXX", and "XXX". Upon funding, an agency selection shall be made and, with their assistance, a comprehensive advertising and promotion plan will be drafted. Advertising will be done independently and cooperatively with Distributors, OEMs, retailers and companies with whom (Company) has joint marketing/sales relationships. Advertising and Promotion Objectives Position (Company) as the leading XXX (maker, servicer) in the market. Increase company awareness and brand/name recognition among business managers and XXX retailers, buyers, customers. Generate qualified sales leads for field sales organization action. Develop, through market research, significant information to develop immediate and long-term marketing plans. Create product advertising programs supporting the "XXX" (better taste, lower fat, more fun) position. Coordinate sales literature, demonstration materials, telemarketing programs, and direct response promotions in order to XXX. ► Describe how your advertising/promotion objectives fit together to optimize the impact of your overall promotional campaign. Media Objectives Gain awareness of company among XXX groups, XXX engineers, XXX buyers, and XXX customers and owners. Establish an image of (Company) as a XXX organization that is very professional, completely reliable, and highly XXX (position in market). © Copyright, 2009, JaxWorks, All Rights Reserved.
    • Maximize efficiency in selection and scheduling of publications to cover XXX and XXX markets. Media Strategy Position (Company) in a quality editorial environment consistent with creative objectives. Select primary business publications with high specific market penetration. Schedule adequate frequency to impact market with corporate image and product /service messages. Select specific media to reach dual markets. Where possible, position advertising in or near XXX (articles on industry, product /service reviews, front cover, center spread) and appropriate editorials. Utilize U.S. editions of XXX, XXX, and XXX (consumer, trade, specialty publications). Employ special high-interest issues of major publications when possible. Maximize ad life with monthly and weekly publications. To get the most out of our promotional budget, our media coverage will be to focus on a XXX audience. ► Recap your customer profile. ► Select specific group that buys your product or service. We will develop an advertising campaign built around XXX (product/service innovation, high-performance, competitive advantages), beginning with a "who we are" position and supporting it with ads that reinforce the XXX message. Importantly, we will develop a consistent reach and frequency throughout the year. Due to the nature of our product/service it is necessary to run (full-page 4-color ads/only 1/4 page B&W ads). Advertising Campaign The best way to reach our potential customers is to develop an intense advertising campaign promoting our basic premise -- "XXX" (your selling basis, theme, position in market). To maintain/establish our XXX company image, the delivery and tone of our statements will be XXX (understated elegance, hard driving excitement, © Copyright, 2009, JaxWorks, All Rights Reserved.
    • excellence, glamour, reality, slice-of-life). Ads will convey the look and feel of a XXX (describe your image) company. Research indicates that XXX (direct mail, direct response, TV, Radio) type of advertising has not yet been used by any of our competitors. The consumer mindset, as described in "Marketing Strategies" is XXX. (see also Customer section). Ideally, after becoming familiar with our product/service(s), the consumer will XXX. ► Specify actual consumer action -- call our toll-free 800 number and place their order using their Visa card, call for a brochure, attend our tradeshow booth, etc. ► Being specific here will set the stage for developing appropriate ads. To eliminate the biggest objections to immediate action, our advertisements must address XXX (known/anticipated objections, difficulties with product/service acceptance, how to own/use product or service immediately). Because XXX (product/service) is so innovative/unique/etc., it is important to develop a promotional campaign that is consistent and easy to understand. Accordingly, (Company) has created a system of research and response to insure the maximum benefit of our advertising dollars. ► Develop an ad history: One way to measure publication effectiveness is to count the number of responses/inquiries and/or purchases per 1,000 readers (paid circulation) -- given a particular ad. Vary your ads (size, message, etc.) and measure the differences. Now you can calculate the number of responses per your investment in advertising. Preliminary Media Schedule Circulation Budget Ad Size XXX (magazine, TV, Radio) 50,000 $1,500 1/4 Page XXX 450,000 $4,400 1/2 Page Total 500,000 $5,900 3/4 page Anticipated Response (ex: 1/1,000) 500 $11.80each ► List publications. ► Editorial dates -- when they will run special issues (Special Issue: Office Automation, etc.) that will enhance your ads. ► Obtain a copy of SRDS (Standard Rate and Data). © Copyright, 2009, JaxWorks, All Rights Reserved.
    • We expect to achieve a reach of XXX (total circulation/audience), and to maintain that for a period of at least XXX (months). Due to the XXX (seasonal, geographical, etc.) nature of our audience, we plan to XXX (how you will counter these issues.) In regard to competitor's advertising, it is necessary to XXX. ► Explain how your message will contrast with theirs. ► What if they run similar ads? Promotion In addition to standard advertising practices, we will gain considerable recognition through XXX. ► Trade programs that are advantageous. ► Consumer programs that are advantageous. ► Press releases (if product is justifiably new and innovative). ► Include budget and rationale. ► See also Public Relations section. (Product/Service) has already been installed at XXX and XXX (companies, customers, stores, government agencies). Our products/services will be placed/offered in additional XXX's at substantial discounts. The number of trade shows attended will be increased from XXX to XXX each year. These shows will be attended both independently and with companies with which (Company) has joint marketing/sales or OEM agreements. Reports and papers will be published for trade journals and technical conferences. XXX (product/service) will be provided as a service in a XXX (retail store, manufacturing, professional) environment -- a showcase for (Company)'s products/services and an ongoing XXX (test, market test, product development, promotional) environment. Ideal consumer actions would be XXX (call 800#, clip the coupon, come to store, call for a demo). Incentives ► Consider the appropriate use of advertising specialties like coffee mugs, t-shirts, imprinted gifts and gadgets. © Copyright, 2009, JaxWorks, All Rights Reserved.
    • ► Look in your Telephone Classifieds under "Advertising Specialties" and request some catalogs for ideas. Direct Mail ► Go to your local Post Office and request copies of The Mailer's Guide. It contains abridged information on bulk mailing permits, mail classification items, customer service programs, and other facts basic to mailing needs. ► Collect mailing list catalogs -- look for all the possible outlets for your product. ► Look in your Telephone Book Classified Advertising under "Mailing Lists". ► Complete the chart below -- the list may surprise you as well as prove to be a valuable resource for resellers. Store/Company type Total SIC Code Department Stores 23,275 5311 Garden Supply Stores 16,496 5261B Hardware Stores 40,140 5251 Giftware Wholesalers 3,524 5199G Electrical Equipment Whlse 41,313 5063 Total 124,748 Corporate Capabilities Brochure Objective: To portray (Company) as the leading supplier of state-of-the-art dynamic XXX. Recommended Contents Introduction/background ► Importantly, a distinction between the "new" XXX and other products. ► Statement of business philosophy. ► Statement on technology and list of "firsts". Facilities ► A photographic tour. © Copyright, 2009, JaxWorks, All Rights Reserved.
    • Company profile ► Sales -- portray full selling team including Representatives, Distributors as a savvy, dedicated support group with one overriding mission: customer satisfaction. ► Marketing -- present marketing department in their role of market research, product development, new product management, etc. providing improved product ideas to the user. High-Tech Companies ► Manufacturing -- in-depth view of sophisticated manufacturing with special emphasis on performance, inspection, advanced methods, capacity. ► Technical Support/Quality Assurance -- portray the QA and technical support staff as highly competent and dedicated group of individuals concerned with customer satisfaction, and with elimination and/or improvement substandard XXXs. ► Product Development -- present super high-tech image of the R&D group and their facilities. State-of-the-art image critical. Product innovation critical. Photos of "secret" products undergoing tests, etc. Sales Support Collateral Materials Sell XXX (Product/Service) ► Audio/Video Introduction Tape. ► News Releases -- List appropriate. ► Brochures. Attract and Support Distributors ► Introduction -- Letter. ► Business Plan -- Brief outline describing objectives, strategy, tactics to align resellers with you. ► Questions & Answers -- Address common questions. ► Some Ideas -- Other thoughts to be planted in reseller's minds -- align their thinking with yours (collect their input from successful experiences). Help Distributors Sell XXX © Copyright, 2009, JaxWorks, All Rights Reserved.
    • ► Presentation Binder. ► Presentation Format -- 1 on 1, Groups. ► Phone Script. List items that will assist the communications process Ads Newsletters Brochures Post Cards Bulletins Presentations Business Cards Price Lists Catalogs Promotions Charts Proposals Data Sheets Questionnaires Direct Mail Reports Financial Reports Resumes Forms Stationery Handouts Telephone Scripts Invitations Videos Letters Investment In Advertising And Promotion For the first XXX months/years of our project, advertising and promotion will require $XXX (figure about 20% of sales $$$ the first year) On an ongoing basis we feel that we can budget our advertising investment as XXX% of total sales. This figure is necessary because of XXX (the specific goals you must meet). ► What is the optimum spending level for advertising and promotion? ► How does this compare with industry averages? Our Spending vs. Industry Average Advertising Sales Promotion Trade Consumer Other (specify) ► Note that these figures may differ from those expressed in the Business Objectives chart. The numbers here may be a percentage of shipments or may have other contingent conditions attached. Compared to industry average we are investing (more/less) in (Trade, Consumer, etc.) promotion because XXX. ► Do the "heavy spenders" perform better? © Copyright, 2009, JaxWorks, All Rights Reserved.
    • ► What are your conclusions on advertising spending policy in this category? © Copyright, 2009, JaxWorks, All Rights Reserved.
    • Public Relations ► "Now gongs and drums, banners and flags are used to focus the attention of the troops. When the troops can be thus united, the brave cannot advance alone, nor can the cowardly withdraw. This is the art of employing a host." -- Sun Tzu, The Art of War ► This section can assist tremendously when you prepare to introduce your venture to its various public segments. Objectives Position (Company) at the leading edge in providing XXX (product/service for industry or market segment). Increase (Company) awareness and name/brand recognition among managers/ buyers/customers in XXX (prospective companies/industries/markets). Communicate on a regular basis with three target publics: ► Major trade, business, and local publication editorial staffs. ► Key management personnel in the existing customer companies. ► Employees and sales representative organizations. Strategies Develop a sustaining public relations effort, with ongoing contact between key editors and top-level personnel. Develop a regular and consistent product/service update program for the major target medias, keeping key editors abreast of XXX enhancements and XXX new product/service introductions. Develop an internal newsletter which can cover key sales successes, significant marketing and manufacturing events, technical support and product development stories. Internally, the newsletter would be targeted to all company personnel and sales representatives; externally the piece would be targeted to key customers and prospects. Develop a minimum of four technical articles written by key executives to be placed in XXX and XXX (publications) within the next XXX months. Establish contact with editorial staffs for the purpose of being included in product "round-ups" -- product/service comparisons vis-à-vis Consumer Reports where competing products/services are compared. This exposure builds credibility and market acceptance. © Copyright, 2009, JaxWorks, All Rights Reserved.
    • ► See "Bacon's Publicity Checker" at your local library for a directory of publications and editors suited to your business purposes. Company Backgrounder Produce a complete company backgrounder on (Company) to be used as the primary public relations tool for all target media editorial contact. This is also effective for inclusion in press kits, dealer kits and sales packages. The backgrounder would include sections on the following broad subjects: ► Overview of the Market: size; characteristics. ► The Market need in 20XX, present & future. ► The Company History Management Philosophy Brief sketches of Top Executives ► The Products/Services. Market niches Major Sales Announcements Major contract agreements representing sales volumes of over $XXX should be written up and released to selected media as soon as practical after the signing of papers. Ideally, these would be joint announcements. Concurrently, a shortened version of the release should be mailed to all internal and external sales organizations. Press Releases Develop a series of press releases on the entire product line/service area. Prepare press releases for each new product/service introduction, technical development, participation in a major event, awards/recognition for product/personnel excellence/performance, etc. ► Include an 8x10 black & white glossy photo of your product or of an interesting demo of your service -- editors will likely pick up your news release sooner with a photo. Editorial Visitations Over the next XXX months invite the most influential reporters and editors from XXX and XXX (publication and or broadcast media names) for a visit to (Company). During the visit, each of the editors would receive a complete facility tour, product briefing, and an opportunity to interview the chairman, president, product designer and marketing manager. If logistics or timing is a problem with the interviews, then these could possibly be © Copyright, 2009, JaxWorks, All Rights Reserved.
    • arranged at the major trade shows. Trade Shows Use trade shows as another method for maintaining a high profile with the editors of key target media. If a major product/service announcement is feasible at one of the shows, care should be taken to plan the announcement well in advance. However, since the major publications send their editors to the major shows, an opportunity exists to schedule, in advance, key personnel with selected reporters and editors. These mini-interviews can be used in lieu of the above described editorial visit, or as opportunities to give editors a company or product update from a chief executive's point of view. Internal/External Newsletter Produce a four-page, black-and-white (2-color/4-color) newsletter to serve as an informational piece for internal personnel, the sales force, and key customers. Include sections covering each major department or organization within (Company) (Sales, Marketing, Manufacturing, R&D) and a message from the executive staff. Highlight major developments such as XXX (key sales stories, successful customer applications/uses/ installations, significant marketing events, and product development news). © Copyright, 2009, JaxWorks, All Rights Reserved.
    • Business Relationships ► There are many ways to reach the top of an oak tree -- a) start climbing, b) sit on an acorn, c) make friends with a big bird... this is a list of BIG Birds. (Company) has formed some very important relationships with major companies in the industry. The following is a list of existing relationships: OEM Relationships OEM's (Original Equipment Manufacturers -- e.g., an automobile manufacturer installs your tires on their cars) provide another source of income, yet with less product recognition. The major advantage of selling through OEMs is to provide a means of more rapidly penetrating the market. Also, these relationships provide (Company) with world wide coverage through established sales forces. We have signed OEM agreements with: XXX, our XXX (product) is part of their XXX XXX XXX An OEM agreement is being negotiated with XXX and XXX. Joint Marketing Agreements Joint marketing with established companies will produce revenues, credibility, and market presence. (Company) is pursuing joint marketing agreements with other organizations to further the name of (Company)'s products/services in the XXX market. Our plans include having them market our XXX products/services within their product line. We plan to offer the XXX (other company's product/service) to augment our product line. (Company) currently has a joint marketing relationship with XXX, and we are in the process of engaging in agreements with XXX, XXX, and XXX. Third Party Supplier Agreements We feel that we require XXX (additional features/components) to enhance the attractiveness of XXX (product/ service) to customers. Because we do not have the resources to XXX (develop/produce/install), we © Copyright, 2009, JaxWorks, All Rights Reserved.
    • rely on XXX manufacturers for the development of many types of XXX (additional features/ components). XXX (air conditioning systems, graphic equalizers) is one such example of valuable XXX. (Company) has an established Third Party Supplier relationship with: XXX, suppliers of XXX XXX Additional Third Party Supplier agreements are being negotiated with XXX, XXX, and XXX. Joint Development Efforts (Company) has been involved with joint development efforts with XXX and XXX. Financial and technical responsibilities are/were shared when doing joint development with XXX. A joint development project with XXX has been discussed, but has not yet begun. Also, this project has been discussed with (and would receive technical input from) XXX, XXX, and XXX. © Copyright, 2009, JaxWorks, All Rights Reserved.
    • Marketing Strategy ► "He who excels at resolving difficulties does so before they arise. He who excels in conquering his enemies triumphs before threats materialize." -- Sun Tzu, The Art of War ► Strategy: The science of planning and directing large -- scale operations, specifically of maneuvering forces into the most advantageous position prior to taking action. ► It is important that your thinking in this section follows closely to the definition of Strategy because it will help you specifically define your business activities, strengths and direction. Carefully designing this portion of your business plan will enable you to appropriately respond to business conditions and opportunities -- it will make the difference between mediocrity and superiority. That's why you're here, isn't it? (Company)'s marketing strategy is to enhance, promote and support the fact that our products/services XXX (your unique features, benefits, establish market position/presence). Comprehensive Plan The overall marketing plan for our product/service is based on the following fundamentals: ► Type of business you want to be in. ► Segment of the market(s) planned to reach. ► Distribution channel planned to be used to reach market segment: retail, jobbers, wholesalers, brokers, door to door, mail order, party plan, etc. ► Share of the market expected to capture versus time. To prove the value of XXX (product/service) we can XXX. ► Show each application. ► Demonstrate effects. ► Add credibility with scientific reports & studies. The void of XXX (product/service features/benefits) in every day XXX (specific business/professional/manufacturing/shipping/living/household situations) is demonstrated by XXX. © Copyright, 2009, JaxWorks, All Rights Reserved.
    • ► Based on studies of XXX. ► Most of the country (and world) are XXX (describe their situations / circumstances). ► Describe why: XXX (they have problems, continue without your products / services). Product Strategy XXX should be treated as a XXX (long-term/short-term) product/service. ► If more than one, indicate for each long or short-term. ► Important! How long before product pays for itself? As such, the target market segments to focus on are XXX (specific customers) Because of (product)'s special market characteristics, XXX (seasonal, geographic, as mentioned in Market Analysis) our strategy includes/incorporates XXX (how you will address specific market/environmental conditions). Positioning ► How customers perceive your company and product, relative to competition. Read this statement again. And again. ► Product/Business/Industry leadership. ► RECOMMENDED READING: Positioning by Al Ries & Jack Trout. Our (product/service, or similar/competition's product/service) is seen by the consumer as XXX. (Customer's perception of your product/ service. Ask THEM. See also Focus Group Research section.) Its unique advantages (technical, quality, performance) can be exploited to arrive at a winning position in the consumer's mind. In terms of market segmentation advantages, we can use XXX (upscale consumers, ethnic appeal, etc.) to arrive at a winning position here. Reposition (product/service) as XXX (example: from a cost to an investment, vacation becomes an "escape from civilization", etc.). XXX (other products, services, people), to be effective, depend on the presence of our XXX (product/service). Reposition the Competition We can reposition our competitors by XXX. © Copyright, 2009, JaxWorks, All Rights Reserved.
    • ► What can be said/shown about a competitor's product/service that will change your customers' minds (about the competitor's product -- not yours)? The resulting Selling Basis for our product, then, is XXX. ► This is your fundamental strategy for all of the advertising you do. ► Test the Unique Selling Basis to make sure that it is: Meaningful Believable Motivating Memorable Simple Logical Unique Up to this point, our Selling Basis has been XXX. ► In close alignment to Selling Basis? ► Contrary to Selling Basis? ► Lacking any clear definition at all? International Market ► It is important to consider your worldwide opportunities from the start. ► List countries in order of priority Rationale Language Usage of product/service ► See Advertising & Promotion, Selling Tactics and Distribution sections for detailed plans of action. Outside Suppliers ► Include some of the following references: Ad Agency PR Agency Direct Mail Mailing House Direct Response Firm Fulfillment House Graphic Designer Display Designer Packaging Supplier Demonstrations - Guides, Literature © Copyright, 2009, JaxWorks, All Rights Reserved.
    • Market Research Focus Groups Sales Literature, Tools Market/Planning Consultant Premiums Suppliers Telemarketers Marketing Responsibilities ► Define who will be responsible for these areas and decision dynamics involved: New business development Dealer and OEM support Sales generation tools Corporate graphics standard Brand mark recognition Direct response promotion Telemarketing - scripts/training Product position and identification Selling Tactics ► See section on Selling Tactics for detailed plan of action. Advertising and Promotion ► See section on Advertising & Promotion for detailed plan of action. ► Includes: Company Positioning (identity within market) ► The identity is consistent throughout all areas of communication. Promotional Tools ► Brochures and Catalogues. ► Other Collateral Materials. Advertising ► Targeted Advertisements. ► Media Selection & Strategy. Sales Support ► Distributor & Retailer Support Packages. ► Representative support (sales tools). ► Communication within channels of distribution. Feedback Loops ► Lead Generation. ► Lead Referral & Follow-up systems. ► Information gathering & dissemination. Public Relations © Copyright, 2009, JaxWorks, All Rights Reserved.
    • ► See section on Public Relations for detailed plan of action. Strategy Review Now review all strategic statements against the following tests. ► Do the strategies define means for achieving the objectives you set, or are they merely restatements of those objectives? ► Are the strategies consistent with your evaluation of the marketplace and your capabilities? ► Is the return on investment sufficient to justify the risks? ► What are the chances of a competitor executing a similar strategy? In that case, what would happen? ► Are the strategies consistent with the political environment within the company? ► Have you made sure your strategies are based on facts, and not assumptions? ► Does the overall strategy leave you critically vulnerable to a shift in market behavior? Are all your eggs in one basket? ► Is your appraisal of the competition open-minded and honest? ► Is your strategy legal? ► Is the success of your strategy based on your ability window? What are the chances of failure? ► Have you thoroughly examined alternative strategies? Do you have a sound, deductive rationale for your recommendations? Next Steps Based on the strategic plan, decisions that must be made now cover XXX. The information needed to make those decisions includes XXX. ► Data, research results, etc. Key decisions to be made in the near term (next six months) are XXX. ► Plus decisions to be made after six months, but before the next fiscal budgeting process? The information needed to make both of these decisions with confidence © Copyright, 2009, JaxWorks, All Rights Reserved.
    • includes XXX. ► Primary research projects (topic, time frame, budget). ► Secondary research studies (topic, vendor, timeframe, cost). The most sensible research recommendations are to XXX. ► List questions you need immediate answers to. ► See also Focus Group Research for a detailed plan of action. © Copyright, 2009, JaxWorks, All Rights Reserved.
    • Manufacturing ► Description of the proposed organizational location, make vs. buy, facilities, and logistics. ► Emphasis must be on the productive use of capital, labor, and material resources, manufacturing processes, vendor relations, experience and distribution requirements. Statements are needed which indicate initial volume and expansion requirements as well as product/process complexity, uniqueness, and costs. Research and Development Much of the time and effort at (Company) during the past XXX year period has been spent on research and XXX product/process development. XXX products listed in the Products section have been tested for their ability to be manufactured and are XXX (currently ready, will be ready by XXX) to market. Based on our pilot production experience with XXX (product), the following tasks/operations were tested to validate feasibility of manufacturing. Task/Operation (Sample) % of Time Product technology and methods 20% Key parts and vendors 15% Processing sequence and repeatability 20% Capital equipment and vendors 15% Specifications and control measures 20% Production lead-time and volume standards 10% Total 100% Pilot testing indicates standard unit production will be XXX hours per XXX units. Processes have been validated to ensure optimally cost-effective, quality product output. Final tests were successful with regard to XXX (all, most, etc.) evaluation criteria. Results are available if need-to-know is indicated (proprietary information). Testing was conducted during the period XXX through XXX using XXX facilities. Volume testing will be accomplished XXX. ► How this will be accomplished and when. ► Use milestone chart to indicate ramp-up tasks, resources, and milestones. ► Specify equipment facilities, labor, etc. required in terms of © Copyright, 2009, JaxWorks, All Rights Reserved.
    • quantity, number, and cost. The following product/process requires additional pilot testing prior to volume testing: XXX (list or otherwise indicate) These products are expected to be ready for market over the following XXX period: XXX, XXX, and XXX (when other products are generating sufficient cash flow to support additional product development). Production and Manufacturing The process used to produce (product) begins with XXX (full description). Key factors in the manufacturing process are XXX. Raw/prefabricated materials, components, sub-assemblies, required for production are XXX. ► List and describe equipment, material, and labor requirements. ► Are prices negotiable? ► Are they readily available? ► Alternate sources/materials? ► Quality/Technical specifications. ► Inventory requirements. ► Hazardous materials? We take advantage of economies of scale by XXX. ► Quantity discounts, package deals. ► Indicate resource capacity and expected utilization over time, any installation and maintenance costs, and vendor availability if applicable. ► List and describe the business in terms of production rates, capacity constraints, or required quality assurance and safety programs. In comparison to other companies, (Company)'s products are reproduced quickly and economically by XXX (how process/techniques accomplish this). Comparative analysis shows these figures to be XXX. ► Higher, lower, or in line with competitors? © Copyright, 2009, JaxWorks, All Rights Reserved.
    • This is due to the fact that XXX. ► More efficiently produced (due to land costs, energy savings, leaner management)? ► Is your product of better quality? ► Is your quality control program more thorough? ► Parts made in-house or subcontracted? ► Tooling required for production and estimated costs. ► Quality Control (INVESTORS will want to know that warranty costs will be minimal). Integration (Make vs. Buy) At (Company) we will XXX (fabricate, assemble, subcontract, etc.) the following XXX (key parts, components, subassemblies, etc.): ► List parts, etc. with vendors, lead-time, costs, etc. People Line employees include XXX. Staff employees include XXX. ► List required number of people and their skills. ► How and when will they be trained? ► Who will hire and manage them? ► Discuss procedures and measures of effectiveness and productivity. To protect proprietary interests and information the following policies will be enforced (work with attorney to develop this section). Facilities The manufacturing facility will be located in XXX. This location will provide needed space for initial production and expansion to meet projected demand over the next XXX (periods). The acquisition cost for land and improvements is $XXX which will be allocated in XXX increments. (Company) already owns/has access to/requires XXX. © Copyright, 2009, JaxWorks, All Rights Reserved.
    • ► Capital equipment needed and its estimated cost. ► List equipment or facilities and the space and location required. Selection of the site includes the following considerations: ► Room and cost for expansion. ► Land and construction costs. ► Transportation cost and route access -- common carrier, company owned, pooling agreement with XXX freight forwarders. ► Risks and insurance. ► Packaging and material costs and availability (suppliers?). ► Labor pool availability, skills, costs. ► Local ordinances, licensing, and permit requirements. ► Government assistance (roads, training, exemptions, etc.). ► Government restrictions and requirements (OSHA, NLRB, etc.). ► Community attitudes toward business and manufacturing. ► Continued operating costs (utilities, communications, etc.). An efficient production process hinges on proper layout of XXX. ► Layout of proposed plant and manufacturing flow chart. Equipment will be deployed as indicated below. ► List equipment, number, capacity, space requirements cost, etc.. ► Provide rough illustrations of equipment layout and process flow diagrams. This equipment is used in the processes as described and configured above to ensure yield, lead-time, and costs are sufficient to provide projected gross margin. Additional questions: ► Where will distribution centers be located? ► What packaging and handling equipment will be used and who will supply it? © Copyright, 2009, JaxWorks, All Rights Reserved.
    • ► What special equipment, if any, will be needed? -- i.e. trucks, tractors, etc. ► Will warehouses be used? If so, where and what size? What inventory levels will be carried? Equipment? Labor? Competition? Packaging and Transportation The last steps in the manufacturing process are important in establishing the desired image to the consumer. Of the standard packaging treatments available, the best choice for our needs is XXX (bubble pack, shrink wrap, poly bags). And, since this is a readily available process, considerable savings can be made. XXX (type of packaging) is more widely used, but in order to convey a unique selling image/position we are considering using XXX (another type). Our competitors use XXX (type of packaging ) as well, but by using distinctive graphics (as discussed in Advertising & Promotion), our unique identity will be maintained. Transportation will be XXX. ► How does your product ultimately reach your customer? ► How many steps are involved? ► Which is the "weakest link", and how will you address that? ► If using your own fleets, will they receive same graphics quality as the product itself? ► Is this the same method your competitors use? Comparative costs show that XXX. ► How do your packaging and transportation costs look in comparison to the competition? © Copyright, 2009, JaxWorks, All Rights Reserved.
    • Financial Projections NOTE: ► These are suggestions of financial projections that should be organized using a spreadsheet processor. Keep in mind that financial projections do not stand on their own -- anyone reviewing your financials will also expect to read a discussion of your position that supports the projections that you've made. ► Do not overdo this section. Keep numbers conservative and realistic, and be able to back them with actual orders, appropriate customer demographic information, and accurate production costs. ► If you do not have a spreadsheet processor, the following sample statements can assist you to present the appropriate financial information. Start-up Costs ► List here the anticipated costs for initially establishing yourself in business. Cash $ Initial Accounts Receivable Inventory Equipment Fixtures Rent Deposits Remodeling Utilities Legal & Professional Fees Opening Advertising & Promotion Total Start-Up Investment $ Use Of Funding Proceeds ► If the purpose of your business plan is to secure venture funding, then it is important to show how you will use your investors' money. (Company) has developed a line of XXX products superior to © Copyright, 2009, JaxWorks, All Rights Reserved.
    • all other products that exist in the market today. In order to service the identified target markets with these superior products, significant capital infusion is required. Specifically, the required $XXX will be allocated appropriately to: Marketing and Advertising $XXX Salaries XXX Facilities XXX Capital Equipment XXX Research and Development XXX Operational Expenses XXX Funding XXX Capital XXX Total $XXX Income Statement (Profit & Loss) Last Year This Year Next Year $000 $000 $000 Sales $ Cost of Sales Material Labor Overhead Total Cost of Sales $ Gross Margin $ (Sales Less Cost of Sales) Operating Expenses: Marketing, Selling Costs $ Research and Development General & Administrative Total Operating Expenses $ Income (Loss) from Operations $ Interest Income (Expense) $ © Copyright, 2009, JaxWorks, All Rights Reserved.
    • Income (Loss) before Taxes $ Taxes on Income $ Net Income (Loss) $ Cash Flow Forecast Last Year This Year Next Year $000 $000 $000 Beginning Cash Balance $ Cash Receipts Collection of Receivables $ Interest Income Total Cash Receipts $ Cash Disbursements Accounts Payable $ Payments of Other Expenses Income Tax Payments Total Cash Disbursements $ Net Cash from (Used for) Operations $ Sale of Stock Purchase of Equipment Decrease (Increase) in Funds Invested Short-term Borrowings (Repayments) Ending Cash Balance $ © Copyright, 2009, JaxWorks, All Rights Reserved.
    • Balance Sheet Last Year This Year Next Year $000 $000 $000 Assets: Current Assets $ Cash (C) Investments Accounts Receivable (R) Notes Receivable (N) Inventory Total Current Assets (A) $ Property, Plant and Equipment Building $ Office Equipment Leasehold Improvements Less Accumulated Depreciation Net Property & Equipment $ Other Assets Total Assets $ Liabilities & Owners' Equity: Current Liabilities $ Short-term Debt Accounts Payable Income Taxes Payable Accrued Liabilities Total Current Liabilities (TCL)$ Long-term Debt Owners' Equity Retained Earnings (Deficit) $ Total Liabilities & Owners' Equity $ Ratios Current Ratio = A/TCL Quick Ratio = (C+R+N)/TCL ► Current Ratio shows your liquidity (ability to pay off liabilities). Quick Ratio shows your effective cash position. Higher ratios indicate financial strength. © Copyright, 2009, JaxWorks, All Rights Reserved.
    • Break-Even Analysis Per Month Per Month Per Month Optimistic Realistic Pessimistic Fixed Costs Rent $ Salaries Utilities Insurance Taxes Depreciation Total Fixed Costs (TFC) $ Variable Costs Supplies $ Outside Labor Raw Materials Wages Advertising Maintenance Other Variable Costs Total Variable Costs (TVC) $ Number of Units (U) Variable Cost/Unit (VCU) = TVC/U Selling Price (SP) $ (TFC+TVC)/SP = U = number of units to sell for break-even (TVC+TFC)/U = SP = sales price at a given unit volume for break-even © Copyright, 2009, JaxWorks, All Rights Reserved.
    • Appendix ► Information required to support the major points in the business plan -- the items used to develop your plan. ► Everything to assist readers to understand the background of your plan and the basis of your rationale and projections. Resumes of key people Data supporting ability to meet sales goals: Actual orders Personally known prospective key accounts Potential customers Price Schedule for product line or service Market Survey Data Equipment in Inventory Drawings Agreements Articles/Publicity Letter from patent attorney stating likelihood of patent application being accepted Financial Projections 5 Year Market Projection 18 Month Disbursement Schedule Advertising & Promotion Disbursement Schedule Staff and Equipment Disbursement Schedule Research and Development Disbursement Schedule Increased Expenses Disbursement Schedule Summary of All Disbursement Spreadsheets 5 Year Projected Income Statement Sales Forecasts For Year 20XX OEM and Maintenance Revenue Forecast New Sales Revenue Forecast Other Revenue Forecast Summary of All Revenue Forecast © Copyright, 2009, JaxWorks, All Rights Reserved.
    • Conclusions & Summary ► Approach in starting the new organization. ► Total capital required and the safety factor used. ► Profit expected and when expected. ► Planned schedule for starting business. ► Comments. © Copyright, 2009, JaxWorks, All Rights Reserved. Return to JaxWorks by clicking on the link below: http://www.jaxworks.com/ © Copyright, 2009, JaxWorks, All Rights Reserved.